A federal appeals court ruled today that Maryland violated federal law when it required Wal-Mart Stores to increase spending on employee health insurance, in a decision that appears likely to end a bitter yearlong legal battle that pitted state legislators, organized labor and health care advocates against the nation’s largest retailer.

The 2-to-1 ruling by a panel of the United States Court of Appeals for the Fourth Circuit is a major setback — if not a fatal blow — for a nascent campaign, called “fair share,” that sought to move millions of America’s working poor off of state-sponsored insurance programs, like Medicaid, and on to employer-based plans.

(…)

the appeals court, upholding a lower court ruling, found that the Maryland rule violated a federal labor law intended to allow companies to create a uniform system of health benefits across the country, rather than navigate a patchwork of state-by-state requirements.

By requiring employers in Maryland to restructure insurance plans, the court found, the law “conflicts” with the intent of the federal labor law, known as the Employee Retirement Income Security Act, or ERISA.

The ruling could have wide-ranging implications for the so-called fair share health care legislation under consideration in several states, which has been put on hold while lawmakers awaited a final ruling in the Maryland case. It was not immediately clear whether Maryland officials were planning to appeal the case to the full circuit court or ultimately to the United States Supreme Court.

Given the fact that this law has been struck down twice now, once at the District Court, and now at the Court of Appeals, a reversal by the Supreme Court is, to say the least, highly unlikely.

Like the decision earlier this year at the District Court level, this decision did not say that the state doesn’t have the right to compel employers to provide health insurance to their employees, only that such a requirement conflicts with federal law. The right result, but unfortunately for a reason that could be easily reversed given the right votes in Congress. But I’ll take the victory anyway.